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BEYOND PURCHASE PRICE: DETERMINING THE TRUE COST OF MOBILE DEVICES

Posted by Amanda Honig

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September 1, 2015 at 9:30 AM

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This is the final post in a series of four blog posts on mobile devices. 

Navigating The Mobile Device Maze, Part 4: The Importance of Total Cost of Ownership (TCO)

When a business is considering deploying a new mobile computing system, the first question is usually “how much is it going to cost?” The fastest answer is to simply add up the acquisition prices for specified devices, accessories and applications. But the reality is, in today’s complex mobility environments, purchase price is only one of many factors that determine the true cost of your deployment. Most businesses find there are substantial differences between simple acquisition costs and the much more complex—and much more accurate—ongoing operational costs. 

Total Cost of Ownership

So what’s the best answer to “how much is it going to cost?” More and more businesses are turning to the concept of Total Cost of Ownership, or TCO. A successful TCO model takes a lifecycle approach to both hardware and software, which includes the variety of costs that will occur during the lifetime of your mobile deployment. TCO takes into account the life expectancy of devices and applications, service and support costs, recurring operational services costs and a range of indirect costs from downtime to security issues.

Acquisition Costs.  There’s no question that purchase price is a critical factor in determining total cost of ownership. These include not simply device costs, but other hardware and software costs as well, including accessories like scanners, RFID readers and other peripherals as well as the cost of your applications.

Service and Support Costs. In any mobile application, it’s crucial to keep your hardware and software in good working order to minimize loss of productivity due to device failure or software glitches. Cost factors will include warranty considerations involving wear and tear, how quickly devices can be repaired or replaced and the cost of maintaining a “spare pool” of devices to keep employees working if their devices fail.

Recurring Operational Costs. Fundamental to any comprehensive TCO model are recurring costs over the system’s lifetime. These include the costs of operational services such as software licensing, device upgrades, operating system updates and connectivity costs.  

Indirect Costs. Total cost of ownership must also recognize a broad spectrum of indirect costs that can affect productivity and profitability. Examples include how much downtime employees experience due to device failure, dealing with processes such as security and software updates and turning off connections to preserve battery life.

Consumer-Grade and Enterprise-Grade Devices

In taking a lifecycle management approach to TCO, many organizations find that there are significant differences between selecting consumer-grade devices like smartphones and tablet computers and enterprise-grade devices like ruggedized computers and accessories built for harsh indoor and outdoor line-of-business applications. Recent research suggests that consumer-grade options—with their susceptibility to breakage, battery replacement issues, repair difficulties and foreshortened life expectancies—almost always result in higher TCO over a multi-year deployment. One research company, VDC, estimates that the total cost of a consumer device can be at least 51% more than for a ruggedized enterprise-grade device.

TCO Assessment

To help you assess your TCO, innovative new analysis tools are now available. These tools go well beyond purchase price and aggregate technical data to show in much greater detail how different devices will stand up in the real world. TCO is the real answer to “how much will our new mobile devices cost us?”

Sign up for your very own free TCO analysis.

Amanda Honig is the Americas Product Marketing Manager for Handheld Enterprise Mobile Computers at Zebra Technologies. Amanda works closely with Zebra’s product development and global marketing teams to introduce new mobile computing solutions to customers across all industries.

Topics: North America, mobile computing, mobile devices, TCO, Total Cost of Ownership